THE members of copra producing co-operative societies in Papua New Guinea have called on the Government to honour its pledge and buy the Coconut Oil Production Madang Ltd (COPM) as reported The National (Sept 29).
Their call may be a valid one but has any of them or the Department of Trade done any cost benefit analysis or some form of review or research into why COPM has offered to sell all its assets at such a price and why?
I want to raise some questions about COPM’s offer to sell out and “go pinis”:
1. What are the reasons that prompted the sale of COPM?
2. Is the sale price for COPM a bit pricey?
3. Are COPM’s assets valued at more than what is really offered?
4. What are COPM’s annual returns over the last five years?
5. Are COPM’s operational costs greater than its annual turnover?
6. Are coconut oil prices affected by the world market and that prompted the sale?
7. Is the Government going to inherit unforeseen problem(s) if it buys COPM?
Time and time again, the Government has bought businesses like this and after a few years, it finds itself with a huge debt.
At this point in time, I would say that world coconut oil prices are not good and I believe this is why COPM is unable to generate enough profits to absorb its operational costs.
Other competitors are also struggling and were in fact offered to buy out COPM.
There are no takers because of the high asking price.